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Apple

Apple’s shares are going to soar 43%: Goldman Sachs

Apple’s (NASDAQ: AAPL) share price could see a 43 percent rise over the next 12 months as investors shift their focus on the amount of iPhones the company is selling to the number of services it is getting users to pay for, Goldman Sachs (NYSE: GS) said in a note on Wednesday.

The U.S. investment bank has put a $163 price target on Apple’s stock, up from Tuesday’s close price of $113.69 and added it to its “conviction buy list”.

Goldman says Apple currently trades like a “hardware stock” at an 11 times price-to-earnings ratio (P/E), but with the company introducing services such as Apple Music, it will become more akin to Google or Facebook.

“Apple’s multiple embodies the scars from prior fallen giants in hardware (Motorola, Nokia, BlackBerry, and HP, to name a few). However, we think Apple’s business model has less in common with traditional hardware companies, and more in common with companies that monetize mobile users through content and services,” Goldman Sachs said in a note.

“In addition, the recurring nature of Apple’s relationship with a customer base that consumes content and services exclusively through Apple’s hardware has similarities to service providers such as AT&T or Comcast; these similarities are becoming more pronounced with Apple’s new installment plan model for the iPhone, and its expected launch of a live TV service.”

Apple’s stock took a hit earlier this year amid concerns that iPhone growth was slowing. While Goldman agrees, it estimates Apple will still have an install base of 700 million in 2017, up from 500 million currently. The investment bank also notes that it is user base is very loyal and spend much more than Google’s Android users. This year, Apple will generate $467 in revenues per iPhone user, above Google’s $44 and Facebook $11, Goldman said.

Related Quotes

But Apple is still trading at a discount, a view that is likely to change as the idea of “Apple-as-a-service” emerges.

Apple recently launched Apple Music, which costs $9.99 a month, and is rumored to launch an on-demand TV product next year which Goldman said could be around $40 a month. Given the number of services being launched by Apple, the average revenue per user (ARPU) could be as much as $150.

“We calculate a current ARPU of $42/mo per iPhone user, pro rata for the current adoption rates of Mac, iPad, Watch, and services. The theoretical ARPU (assuming every iPhone user has all other Apple hardware products and services) is $153/mo, implying significant growth potential as the adoption of Apple hardware and services increases within the user base,” Goldman noted.

And this will be the driver of Apple’s share price over the next year.

“We think that view will start to shift in 2016 as Apple’s revenues become increasingly sticky and recurring with the launch of installment plans and a TV service, and we would use the near-term concerns over a y-o-y (year-over-year) unit decline as very attractive buying opportunity for the re-rating of Apple from a hardware stock (11X P/E) to a content and services platform (15X P/E),” Goldman’s analysts wrote.

as Palm’s experience showed, one thing the world doesn’t need—not for long, at least—is a company that does only one thing.

When you strap a new Fitbit onto your wrist, it’s programmed to vibrate once you’ve taken ten thousand steps. From there, it keeps on counting. Fitbit can also track other aspects of your health—sleep patterns, calories burned, heart rate—and store the data in its software, so that you can track your progress over time. For Sedaris, who describes himself as “obsessive,” beating his own records becomes a kind of addiction: “At the end of my first sixty-thousand-step day, I staggered home with my flashlight knowing that I’d advance to sixty-five thousand, and that there will be no end to it until my feet snap off at the ankles,” he writes.

One man’s neurosis is another man’s business opportunity. By the end of last year, Fitbit Inc. had close to seven million active users and was nearing a billion dollars in annual revenue. On Thursday morning, the company went public, under the ticker symbol “FIT,” in an offering that initially valued it at 6.5 billion dollars. Fitbit’s most loyal users are a fervid crowd, but the company’s long-term success is far from guaranteed. It has, essentially, one line of products, with variations on the theme, and, while its product was novel in 2008, when it was first introduced, much larger companies have since noticed its success and started putting Fitbit-like features into their own products. In a filing with the S.E.C. in preparation for going public, Fitbit openly acknowledged that this presents a risk:

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Many large, broad-based consumer electronics companies either compete in our market or adjacent markets or have announced plans to do so, including Apple, Google, LG, Microsoft, and Samsung. For example, Apple has recently introduced the Apple Watch smartwatch, with broad-based functionalities, including some health and fitness tracking capabilities.

The Fitbit I.P.O. comes right as Apple stores are beginning to sell the Apple Watch, which has underscored the question : Will Fitbit be able to compete with bigger and better-financed rivals—especially those whose products do more than just track their wearers’ health. (Why settle for just tracking your heart rate in an app, when you can also text your loved ones an image of a heart that pulses to the rhythm of your actual heart?)

Single-product companies have gone public before, of course. The most obvious cautionary tale, among makers of consumer-tech devices, is the experience of Palm Inc. In 2000, when Palm went public, its Palm Pilots—those handheld organizers that were marketed as replacements for paper planners—seemed cutting-edge. Al Gore and Robin Williams had their own; in the Timesmagazine the previous year, the journalist David Colman had called the device “a perfect amulet.” At the time, cell phones existed but were far from ubiquitous, and they didn’t do much more than send and receive calls. In 2003, though, Research in Motion came out with the BlackBerry, and in 2007, Apple released the iPhone—devices that could do what Palm’s organizers could do, plus much more. Palm tried to stay competitive by creating smartphones with revamped software and striking deals with cell-phone carriers to sell them, but, as The Verge has documented, it was too late. Several missteps, compounded by competition from Apple and other devices, such as Motorola’s Droid, that emerged in the late two-thousands, doomed the effort. In 2010, Hewlett-Packard acquired Palm. By 2011, its brand was dead.

/The problem for single-product tech companies is that, no matter how much they spend to develop devices with cool features, bigger companies like Apple—and, more recently, Samsung and China’s Xiaomi—can always spend more. This allows them to rapidly bridge feature gaps with smaller companies, and to incorporate those features into multi-purpose devices. And the threat goes beyond R. and D. Bigger firms also tend to have deeper and longer-standing ties to the suppliers that build their products—and, perhaps more to the point, more influence over those suppliers. They also have more established avenues to advertise and sell their wares and more clout with publishers and retailers. And they have the flexibility to undercut smaller rivals on price. When Nest, a startup that made connected devices for homes, announced last year that it would be acquired by Google, Nest’s C.E.O., Tony Fadell, in a blog post the importance of its acquirer’s impressive resources. “We’ve had great momentum,” he wrote, “but this is a rocket ship.”

What if a company could sidestep the Palm problem? That’s what GoPro, which makes small cameras that record footage from the user’s point of view, appears to be trying to do. The company went public around this time last year, with a valuation of three billion dollars, and its stock price doubled by October. By March of this year, its shares had fallen to close to their original levels, partly because of Apple and Xiaomi (which, incidentally, also sells a fitness-tracking device), though in April, GoPro reported earnings that suggested that it has, so far, managed to do well despite those threats; its cameras are only becoming more popular. In May, the company’s founder and C.E.O., Nick Woodman, announced that it is developing drones and viral assistants Erinn Murphy, an analyst at Piper Jaffray & Co., : “This puts some of the naysayers on their heels, who thought this was just a one-hit wonder.”

It might seem that GoPro is doing something similar to what Palm did in the two-thousands by branching out into new products, but there are important differences in its strategy. As Matt Burns of TechCrunch wrote earlier this month, GoPro wants to position itself not only as a maker of hardware but as a service that people can use to store and share their footage. “GoPro doesn’t want to be known just as a camera company,” Burns wrote. Instead, it “wants to be a lifestyle media company” that can “give owners an easier way to share all that rad action footage.” The goal is to “build a new business based on content, not hardware.” Viewed in that context, drone and virtual-reality technologies could be as much about hardware as they are about allowing people to capture, store, and share more interesting content.

It’s not difficult for companies such as Apple and Xiaomi to replicate hardware features—and even to render single-use hardware products obsolete, as smartphones did to handheld organizers like the Palm Pilot. But, as companies like Facebook and Instagram have shown, once people have stored all of one kind of content with one company, they are often reluctant to leave it all behind and start over somewhere else. Facebook and Instagram also benefit from what is known as the network effect: the more users that a given social network connects, the more useful it becomes—thus making it difficult for other companies, even more established ones, to come along and steal the users away. (This phenomenon is partly to blame for the failure of Google’s social network, Google Plus.)

Palm came of age before anyone had heard the terms “cloud” or “social network”—too early to learn from Facebook or Instagram. But companies like GoPro and Fitbit, whose appeal has as much to do with the material they help store and share as with the devices themselves, might have the best chance at staying in business if they think of themselves not as hardware companies but as providers of services that let people manage and share their content. Fitbit has already announced its own version of a smartwatch—the Fitbit Surge, which sells for two hundred and fifty dollars and includes call and text notifications and music controls. Competing directly with Apple on hardware isn’t a bad move; after all, the success of the Apple Watch is far from guaranteed. Fitbit might want to focus, too, on the health information it stores and lets users share with one another. It may not be able to become a Facebook for health stats, but as Palm’s experience showed, one thing the world doesn’t need—not for long, at least—is a company that does only one thing.

Cantor Fitzgerald sets Apple’s market value at $1 trillion

Having factored in the Watch, Apple TV, cash, the iPhone in China and rumors about other stuff, like cars.

Cantor Fitzgerald’s Brian White, whose neck was already stuck out further than the rest of the sell-side Apple analysts, stuck it out even further Monday.

His old price target, $160, was the market high. With his new price target, $180, he’s betting that within 12 months Apple’s market capitalization (stock price times number of shares outstanding) will have passed $1 trillion.

To put that number in perspective, the total value of the gold mined in all of history, according to the World Gold Council, is roughly $8.5 trillion.

As White sees it, Apple is firing on all cylinders:

Next month, Apple will enter its first new product category in five years, while media reports over the past several weeks have highlighted potential new areas of future innovation. Also, we believe Apple’s iPhone portfolio and position in China have never been stronger. Finally, Apple has shown its commitment to returning cash to shareholders, and we expect more in April. We believe the combination of these forces will drive the market to reward Apple’s stock.”

Below: Our current spreadsheet of analysts’ 12-month price targets, as up to date as we can make it. Corrections appreciated.

(Bloomberg) — The countdown has begun to Apple Inc.’s next big thing: the Watch.
The company on Thursday sent out invitations to an event on March 9 in San Francisco, where it will unveil details for the release of the Apple Watch, a person with knowledge of the matter said.
Optimism about Apple has been growing since Chief Executive Officer Tim Cook first took the wraps off the smartwatch, along with larger-screened iPhones, in September. The new phones helped fuel record profit in the last three months of 2014. Apple shares are trading near all-time highs, giving the company a market capitalization of about $758 billion. The event gives Cook the chance to show off the gadget’s capabilities and convince consumers they need one.
“The development community has had at least three months to start writing apps so I think they’ll profile some of the best apps,” said Tim Bajarin, president of Creative Strategies Inc. “It will start giving us reasons for why we may want the watch.”
Cook said last month that the smartwatch will ship in April. The connected, fitness-tracking wristwatch is the first entirely new gadget line to debut since he took the helm at Cupertino, California-based Apple. The company hasn’t given much information about the gadget’s battery life or how much models will cost, other than $349 for the basic version.
Time Shift
“Spring forward,” reads the invitation to the event, to be held at the Yerba Buena Center for the Arts Theater at 10 a.m. The headline refers to the annual switch to daylight savings time, when Americans move their clocks and watches forward by one hour. This year, the time shift begins on March 8, a day before Apple’s event. The event’s focus will be Apple Watch, said the person with knowledge of the matter, who asked not be identified because the topic wasn’t made public.
Apple Watch, with a rectangular touch-screen face, includes sensors to detect pulse rates and other health-related features and must be paired with an iPhone to work properly. It will come in two sizes and three styles — classic, sports and gold editions. The company may give more details about styles and prices at the event.
“The creativity and the software innovation going on around Apple Watch is incredibly exciting,” Cook said when he announced the watch would begin shipping in April.
Sales Projections
Morgan Stanley has projected Apple Watch will generate $8.1 billion in revenue in fiscal 2015, including $1.35 billion in the March quarter, while RBC Capital Markets said Apple could “conservatively” generate $6.5 billion from 20 million watch shipments.
At a Goldman Sachs Group Inc. conference earlier this month, Cook talked about uses for the watch, saying he uses it to track his activity levels.
“If I sit for too long it will actually tap me on the wrist to remind me to get up and move because a lot of doctors believe that sitting is the new cancer,” he said. “It’s something that you’re going to think, ‘I can’t live without this anymore.’”

A healthy balance sheet, an extensive patent portfolio, launch of the BES12 platform, presence in over 147 countries, the partnership with Foxconn and NantHealth are a few strengths BlackBerry Limited (BBRY) presently boasts. Moreover, acquisition of Secusmart and Movirtu coupled with the launch of the BBM messenger on Android smartwatches are likely to propel growth going forward.

In order to target the automotive and asset tracking industries and to add a revenue stream, BlackBerry launched the Internet of Things (IoT) platform. Meanwhile, the company’s large screen smartphone, Passport, has hit AT&T stores and is available at a minimum down payment scheme.

In the third quarter of 2015, BlackBerry reported a significantly narrower operating loss of $139 million compared with $198 million in the year-ago quarter. Meanwhile, free cash flow stood at $388 million against $177 million in the year-ago quarter.

Meanwhile, all hasn’t been good for the company. BlackBerry has been facing declining smartphone sales, stiff competition from handset manufacturers, a lackluster operating platform and a change in business model for quite some time now.

In the third quarter, BlackBerry sold 1.9 million smartphones against 4.3 million in the same period last year. The count stands significantly below Samsung’s 73.2 million and Apple’s 38.2 million. This hints at the company’s growing trouble in the high-end smartphone business.

BlackBerry’s declining smartphone sales coupled with a deteriorating handset market share have raised considerable concern among industry analysts. Unlike the Android and iOS platform, BlackBerry lacks a popular operating system, which has been largely affecting its sales. Total revenue in the third quarter stood at $1,193 million, down 33.5% year over year.

It Has a Fantastic Physical Keyboard, Great Productivity Apps and Even a Trackpad

A traditional keyboard and trackpad make the BlackBerry Classic a throwback to the smartphone’s early days. WSJ’s Joanna Stern reviews the best BlackBerry ever.

By JOANNA STERN

BlackBerry began shipping the Classic last week, a smartphone that the company hopes will send us all the way back to the early 21st century, when keyboards had keys and apps were what you ordered at TGI Fridays.

The Classic is a throwback to everything that made a BlackBerry a BlackBerry. Instead of a big and awkward square-shaped design like the recent BlackBerry Passport, the Classic has the fantastic physical keyboard, the pleasantly nagging red notification light—and even a trackpad. And forget “Tiny Wings,” this baby has “Brick Breaker”!

The Classic—which currently costs $450 unlocked on Amazon, and will arrive at Verizon and AT&T in the new year—harks back to when smartphones were used primarily for email and other work. That’s great if you just want to get more done with a physical keyboard and powerful productivity apps, but frustrating if you want more. For anything beyond basic Web surfing—like Netflix, Google Maps, Uber, even airline apps like JetBlue—you’re better off with a more modern phone.

Time for a Comeback
For former BlackBerry users, the Classic will feel like reuniting with a long-lost friend. As I hopped on the train and quickly pulled the phone out of my pocket to write down a quick thought for an article, I imagined Etta James’s “At Last” playing in the background.

Unlike the BlackBerry Passport, the Classic is perfect for one-hand use. With a stainless steel frame and a soft plastic back, the 6.3-ounce phone feels heavy, but in a good way. And it feels more substantial than those delicate big-screen smartphones, like it won’t shatter after an accidental drop.

I have been searching for just the right words to profess my love to BlackBerry’s perfected physical keyboard for a decade. It’s hard to describe how my thumbs dance on the fantastically sculpted keys without having to look down at them, or how the metal frets give the perfect amount of spacing to the rows.

But I’m not unreasonably nostalgic. No other smartphone makers sell phones with actual plastic keys anymore. Software keyboards with auto correct and predictive text can do nearly everything real keys can, then vanish when they aren’t needed. Still, I remain optimistic that a few outliers like the Classic will survive long enough to see, at least, the next president.

The Classic’s physical keyboard has fantastically sculpted keys.

Between the keyboard and screen, BlackBerry has resurrected the “belt” of navigation buttons—menu, back and call/hang-up, along with the mouselike trackpad.

BlackBerry could have used that space to make the screen bigger. The crisp 3.5-inch, 720 x 720-pixel touch screen is rather cramped. Yet I was surprisingly happy to see the return of the trackpad. It’s great for editing emails with more precision and selecting small links on Web pages.

BlackBerry may have fallen behind its competitors in mobile innovation over the past decade, but it still leads the pack in two mobile essentials: battery life and call quality.

Even on days of heavy use, I had 20% remaining before going to bed. I still do wish the Classic’s battery was removable (for swapping out or attempting the old-school reboot trick) and didn’t take so long to recharge.

And it’s the BlackBerry Classic—not my iPhone 6 or Moto X—that I reached for when I had to make an important phone call. Not only did the calls sound extremely clear, but people on the other end said I sounded like I was calling from a landline.

The Classic trumps the competition in software with its Hub feature, too. A quick gesture takes you to BlackBerry 10’s universal inbox from any screen, putting communications more readily front and center than other mobile operating systems.

Gone is the Web browser that caused misery to Bold and Curve users. It now loads full-size Web pages by default and does it extremely fast. The small screen means you have to do plenty of pinching and zooming, but at least it renders quickly.

There are far more email-formatting options on the Classic.

The rest of this column could have been a list of reasons why the BlackBerry email and calendar still beat iOS and Android’s for me. In the interest of space, though, here are some favorites: There are far more email-formatting options, including font size and bulleted lists. You can view all the attachments in your inbox, and then easily edit them in Documents To Go. With one tap, you can turn an email chain into a calendar appointment.

BlackBerry is also quick to remind us that one of the Classic’s biggest advantages over the competition is enterprise security. The Classic has system-wide 256-bit AES encryption, and BlackBerry Messenger Protected and the BES email system have end-to-end encryption.

BlackBerry has updated its services to show it understands there’s a need among its users for certain popular features, like BBM video messaging (which includes a sticker store!) and a Siri-like personal assistant that can help send emails and look up popular restaurants. But the company also wants you to be able to keep that work and play separate: Balance puts a secure barrier between your work and personal content and apps.

Stuck in the Past
But while I’d love for all those great BlackBerry features to make a comeback, others simply feel out of date.

Calendar and email aside, other preloaded apps are slow and poorly designed. A Rand-McNally map from the gas station is likely more up-to-date—and speedier—than BlackBerry’s own maps app. Not only did it struggle to help me find the closest Starbucks in New York City, but it lacks typical features like transit directions and 3-D map options.

BlackBerry recommends dissatisfied users try third-party apps, like Waze or Navfree. But while BlackBerrys can run Android apps, the industry-leader Google Maps isn’t available for the platform.

That brings me to the terrible and confusing app situation. There are now two app stores preloaded on the Classic: Amazon’s App Store and BlackBerry World, which sounds like an amusement park I would have loved in 2008. While you can download Android apps from Amazon’s App Store, many big ones are missing—not just the Google family of apps, but also Uber and Instagram.

You can ignore BlackBerry’s warnings and load other Android apps manually, but it takes work. Most apps lying around the Web are out of date or available on shady sites. And if you do find the most recent apps (or go through the annoying process of downloading them on another Android phone and then transferring them to the Classic), they may not resize well to fit the Classic’s square screen.

The Classic has an 8-megapixel camera. ENLARGE
The Classic has an 8-megapixel camera. EVAN ENGEL/THE WALL STREET JOURNAL
I did find and install a year-old version of Instagram. That meant no new filters. But filters can only help so much anyhow: The Classic’s 8-megapixel camera, while fine for basic outdoor or well-lit shots, can’t rival the newest Android and iPhones when it comes to picture quality and speed.

To top it off, I found many of those apps—and even the overall operating system—to be sluggish at times, taking too long to open an app or message.

Still, I believe the Classic is the best BlackBerry ever made. It lives up to every bit of the BlackBerry’s original purpose. This is the best phone to get if you need a real physical keyboard to plow through emails, manage your calendar, browse the Web…and not much else.

When you use it, you will feel like no time has passed at all. And that is, of course, its biggest shortcoming.